The pandemic has destroyed customer loyalty


This article is brought to you by Retail Technology Review: The pandemic has destroyed customer loyalty.

Joint research from 1st-party customer data specialists Edit, and digital transformation consultancy Kin + Carta has revealed the impact of the pandemic on customer loyalty. The report, titled ‘The Loyalty Paradox’ shows that brand loyalty became a thing of the past last year with over a quarter (27.4%) of UK and US consumers showing no ‘brand loyalty’ at all across any sectors.

2000 respondents split equally between the UK & USA, were asked multiple-choice questions relating to loyalty, personalisation, and customer experience, across a broad range of sectors.

E-commerce scored particularly poorly, with only 6% of consumers claiming loyalty to brands within that vertical. As the lowest scoring online segment, e-commerce brand loyalty was below that of finance (9%) and offline retail - food and drink (21.5%).

Rob McGowan, joint managing director at Edit, comments: “These results suggest that while the e-commerce sector boomed during the pandemic, brands would be wise not to confuse habitual purchasing with perceived loyalty.”

Outside of e-commerce, loyalty towards financial products increased with age and, unsurprisingly, with those who have an income of £75,000 plus, with over 20% of respondents in this income bracket claiming loyalty to brands within the sector.

In a digital-first customer journey, rewards are most likely to drive the sharing of personal data across demographics. 43% of respondents suggested ‘a discount code or incentive’ would persuade them to sign up to brand communications. 

A quarter (25%) would like ‘exclusive products or first opportunity to purchase’, Gen Z consumers saw ‘exclusivity’ as particularly appealing, with nearly a third (30%) interested in ‘first opportunity to purchase’. 

While rewards were seen as an appropriate trade off for sharing personal information, more pragmatic considerations still remain the most important consideration to younger audiences. Operational and customer service communications outweighed rewards as a ‘return factor’ for younger generations. 34% of Gen Z respondents, and 32% of Millennials said that they would be ‘deter[ed] from making another purchase if [they] cannot contact customer services via [their] preferred method’.

McGowan continues: “Brands cannot rely on loyalty anymore. Brand affinity through emotional connection has weakened to be replaced by habitual ties based on lived and related experience with brands and retailers.

“Brands therefore need to ensure that they look at the individual customer, and how they interact with the business to understand their behaviours and encourage habitual purchasing. Consequently, brands should be looking at the customer journey as a whole, as well as spotting opportunities to innovate through data. Do it right, and there is an opportunity to retain more customers, as well as bringing in new ones.” 

Karl Hampson Chief Technology Officer Data & AI at Kin+Carta concludes: “Our research shows that brands must not confuse repeat purchasing with "loyalty". Instead, they should balance repeat transactional activity with how engaged the customer is across all interactions. 

“Data will be key to this holistic measure, but equally brands must invest in the capabilities to understand the human behind the data. This means making data more accessible, insights easier to unlock and bringing your customer experience and data teams closer together so a shared understanding and strategy can be achieved."

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